Collective Bargaining

There is both industry and company-level bargaining in Cyprus. In total just over half of all employees in Cyprus are covered by collective bargaining, although precise figures are not available.

The framework

The basic framework for negotiations is provided by the industrial relations code, which was agreed between representatives of employers, unions and government in 1977. This includes a procedure for the settlement of disputes and some key mutual commitments, such as acceptance of the right to organise and the right to bargain. The document is not legally binding but its terms have been effectively observed by both sides.

The code was agreed at national level and there have been other national agreements between the confederations and employers, such as the 1992 agreement on overall reductions in working time and the agreement on disputes in essential services signed in 2004.

Collective bargaining in Cyprus takes place at both industry level and company level. In 2011, the Ministry of Labour listed 19 industry level agreements in the private sector on its website, including agreements for construction, banking, private hospitals and the clothing industry.1
Another important agreement is that for the hotel sector.

However, although industry level bargaining continues to be important, many companies, both inside and outside the coverage of the industry level agreements, negotiate at company level. The Department of Labour Relations estimates that there are 450 company level agreements, in some cases setting the pay and conditions of those not covered at industry level, in others improving on the industry rates. Both unions and employers consider that the balance between company and industry-level bargaining may be shifting, with company level bargaining becoming more important.3

As well as company and industry-level bargaining in the private sector, there is widespread collective bargaining in the public and semi-public sector, where the coverall is close to 100%.

Overall the Department of Labour Relations estimates on its website that, when Cyprus joined the EU in 2004, 70% of all employees were covered by collective bargaining.3
It seems likely that the level of coverage has fallen since then, and the ICTWSS database of union membership and collective bargaining estimated the overall coverage of collective bargaining at 52% in 2008.4

Suggestions that collective agreements should be given legal force, with the possibility of extending them to those not directly covered, were abandoned in 2013.

An important element in industrial relations in Cyprus is the system of mediation and voluntary arbitration. Based both on the voluntary industrial relations code and the service provided by the ministry of labour, this has been used to resolve deadlock in collective bargaining and in settling disputes.

Who negotiates and when?

Industry level negotiations are between the appropriate industrial federations or in some industries such as banking the autonomous union and the relevant employers’ association.

At company level, the parties are the employer and the local trade union, generally through the full-time union official, with the involvement of the union representatives in the company.

Agreements normally last two years, sometimes extended to three, at both industry and company level.

The subject of the negotiations

Agreements cover pay, working time, holidays, travelling and other allowances, as well as procedural issues such as trade union facilities and dismissal procedures.

Many collective agreements also include a cost of living allowance, which is uprated in line with inflation. However, the arrangements for this are likely to change in the future. (They have already done so in the public sector.) The terms of the financial bailout, agreed with the International Monetary Fund (IMF), the European Central Bank and the European Commission in 2013, suggest that changes need to be agreed between the unions and the employers. The intention is that, first, increases should be less frequent, only once a year rather than every six months; second, that they only compensate for half the increase in prices rather than the whole amount; and that, third, it should be possible to suspend the whole system “during adverse economic conditions". 5

These reforms have already been implemented in the public sector, where all cost of living increases are suspended until the end of the bailout.

There is no national minimum wage in Cyprus but there is a minimum wage for some specific groups of vulnerable workers, such as clerical workers, shop assistants, childcare workers and personal care workers. However, as part of the bailout package, it has been agreed that any increases “should be in line with economic and labour market developments” and the IMF and European institutions should be consulted beforehand.